What you need to know to get started in investments
THE world of investments can seem very intimidating for people who are just getting started. Some of the most common questions asked by new investors are: When is the best time to invest? How much money will I need? How can I tell if it’s wise to make a certain investment, and how long will it take before I start making returns on my investment?
But every great investor was once a beginner, and the stock market is just like your farmers’ market — prices fluctuate for different stocks in certain periods, and the key is to know when and what to buy, sell and hold.
Sagicor Investments Jamaica Limited wealth advisor Eugenia Wilson recommends these important tips for getting started in investments:
Research before you invest
Before you invest your money and use it to buy stocks, bonds or shares, ensure you know about the business and its prospects for the future. Look up the company’s history, it’s current finances, and its leadership.
Know your risk appetite
Before you invest a single dollar, you should assess what exactly you are trying to gain from investing, and how big of a risk you are willing to take. Being clear on your goals will help you to develop a clear plan for investing and help you to make crucial decisions for your portfolio as you go along. It is also important to what you want to invest in.
Don’t do it alone
You can only learn so much on your own. Especially when you are a beginner, you need to exercise prudence. You can play it safe by investing in a collective investment scheme where many individuals are pooled together in a fund that is managed by a professional fund manager. If you opt to manage your own portfolio, it is wise to connect with a licensed wealth advisor to help create the best mix of multiple asset classes to maximise your returns.
Think long term
You won’t get wealthy overnight through investing. It can take months or sometimes years for you to see any substantial growth in your portfolio. When planning to invest, plan to play the long game. It is OK to set goals for your portfolio but be realistic and temper your expectations.
Don’t invest money you are not willing to lose
No one intends to lose the money they invest, yet there is always a risk that you may suffer a loss on your investment, or it breaks even, and you don’t see any returns on it. This means you cannot bank on money you invest to be readily available if you have an emergency. It is therefore advisable that you set aside an emergency fund in your savings account before you begin investing.
